Saudi Arabia ISSB Reporting: What Tadawul Companies Must Do

Saudi Arabia ISSB Sustainability Reporting: What Tadawul-Listed Companies Must Prepare For

The mandatory ESG reporting era is arriving in the GCC. Saudi Arabia's Tadawul-listed companies are the last major exchange in the region without a confirmed compliance deadline. That is not a reason to wait. It is the most important reason to move now.

The Capital Market Authority (CMA), Saudi Arabia's securities regulator, and the Saudi Exchange (Tadawul) have spent six years building the foundation: voluntary ESG guidelines in 2019, a structured ESG disclosure framework in 2021, and binding disclosure requirements for green and sustainability-linked debt issuers in 2025. Each step has tightened the expectation. A formal mandate is the next logical move. Companies that have not built their ISSB-ready reporting infrastructure by then will face a compliance sprint they cannot win.

Sources: CMA Saudi Arabia ESG Guidelines, Tadawul ESG Disclosure Framework 2021, STA Terra: ESG Disclosure in KSA 2026

Spectreco, an ESG technology and advisory firm with offices in Atlanta, London, Lisbon, and Lahore, supports companies across GCC markets preparing for ISSB-aligned reporting. This article maps the Saudi regulatory position precisely, compares it to the mandatory UAE framework, and sets out four preparation priorities every Tadawul CFO should be driving in 2026.

Contents: The Current CMA and Tadawul Position | Vision 2030 and What It Actually Demands | What ISSB IFRS S1 and S2 Require | Saudi Arabia vs UAE: A Direct Comparison | Four Priorities for 2026 | FAQ

Is ESG Reporting Mandatory in Saudi Arabia Right Now?

Short answer: Not universally. It is no longer purely optional either. Voluntary CMA guidelines cover most listed companies. Mandatory ESG disclosure now applies to issuers of green, social, and sustainability-linked debt. Full ISSB-aligned mandatory reporting has no confirmed adoption date, but every signal from the CMA and Tadawul points in that direction.

The CMA first issued ESG Disclosure Guidelines in 2019. Tadawul expanded these in 2021 with a structured ESG reporting framework aligned with GRI and SASB indicators. Both remained voluntary. In 2025, the CMA formalised a framework for green, social, sustainability, and sustainability-linked debt instruments (GSS/SLB), making ESG disclosure binding for any company accessing that market.

Sources: STA Terra: ESG Disclosure in KSA 2026, EarthShift Global: Sustainability Reporting Regulations 2026

Market pressure is already outpacing the regulation. In 2024, 94 Tadawul-listed companies published sustainability reports, up from 81 in 2023. Among the top 100 companies by revenue, approximately 65 percent now disclose ESG information. The voluntary guideline is functioning as a de facto market expectation among companies that want institutional investor access.

Sources: STA Terra: ESG Disclosure in KSA 2026

Where ISSB Adoption Stands

The Society of Certified Public Accountants (SOCPA) has reviewed IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). Both the CMA and Tadawul have signalled alignment with ISSB and the Task Force on Climate-related Financial Disclosures (TCFD) framework as the expected direction for future mandatory reporting. A formal adoption timeline has not been confirmed.

Sources: BDO: Saudi Net Zero and Reporting, Anthesis Group: Middle East Mandatory Reporting

That gap between expectation and law is exactly where companies under-invest. The UAE ran the same playbook before enacting its Federal Climate Change Law. Saudi Arabia is at the same inflection point now.

What Vision 2030 and the Saudi Green Initiative Actually Demand from Listed Companies

Saudi Arabia's Vision 2030 programme is not a corporate reporting standard. But it creates the investor expectations that function like one. The Saudi Green Initiative (SGI), launched by Crown Prince Mohammed bin Salman in 2021, sets binding national climate targets that every Tadawul investor now maps to corporate strategy.

Sources: SGI: Saudi Arabia Accelerates Climate Action, Saudipedia: Saudi Green Initiative

The SGI's headline targets for 2030 are:

• Reduce carbon emissions by 278 million tonnes per year by 2030

• Plant over 600 million trees by 2030 as part of a 10-billion-tree long-term programme

• Reach 50 percent renewable energy generation capacity by 2030

• Achieve net-zero emissions nationally by 2060

Sources: Climate Laws: Saudi Green Initiative, Saudi Green Initiative: Official Targets

For a Tadawul CFO, these are not abstract government targets. They are the questions in every institutional investor's due diligence template: What is your Scope 1 emissions trajectory? How does your energy mix align with the Kingdom's 50% renewables target? What climate risks has your board assessed against Saudi Arabia's 2060 net-zero pathway?

Saudi Aramco and SABIC, the two most internationally scrutinised companies on the Tadawul, already publish TCFD-aligned sustainability reports and disclose Scope 1 and Scope 2 emissions data annually. Their reports set the investor benchmark. Mid-cap and smaller Tadawul companies are compared against that standard regardless of whether it is legally required.

Sources: SustainGulf: Corporate Sustainability Reporting in the Gulf, Ghazza Wi Law Firm: Saudi ESG Board Readiness

What IFRS S1 and S2 Actually Require: Broken Down Simply

IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) is the foundational standard. It requires companies to identify and disclose all sustainability-related risks and opportunities that could reasonably affect enterprise value. IFRS S2 (Climate-related Disclosures) is the climate-specific layer, covering four pillars:

Sources: Grant Thornton: ESG Reporting in Saudi Arabia: IFRS S1 and S2

Governance

Board-level oversight of climate risks must be disclosed, including whether the board has members with climate expertise and whether a dedicated sustainability committee exists. For most Tadawul companies, this is a governance restructuring task, not a reporting task. It takes 6 to 12 months to do properly.

Strategy

Companies must disclose how climate risks and opportunities affect their business model and financial planning, including the results of scenario analysis under both a 1.5°C and a higher-warming pathway. For petrochemical and energy companies, this is technically complex. It is exactly where most Saudi listed companies currently have no data infrastructure.

Risk Management

The process the company uses to identify, assess, prioritise, and manage climate-related risks must be disclosed, and explained in terms of how it integrates with overall enterprise risk management.

Metrics and Targets

Scope 1 emissions (direct, from sources owned or controlled by the company) and Scope 2 emissions (indirect, from purchased electricity and energy) are required from year one. Scope 3 emissions across the value chain follow in later phases. Financial institutions must also disclose financed emissions: the greenhouse gas emissions associated with their loans and investment portfolios, classified as Scope 3 Category 15.

For companies beginning this process now, Spectreco's ESG Platform provides automated Scope 1, 2, and 3 data collection with built-in IFRS S2 methodology alignment, replacing the spreadsheet-based tracking that will not survive assurance review.

Saudi Arabia vs UAE: How Far Apart Are They?

The UAE enacted its Federal Climate Change Law in 2023. Scope 1 and 2 emissions reporting became legally binding with a deadline of 30 May 2026. Non-compliance carries fines from AED 50,000 to AED 2,000,000, doubling to AED 4,000,000 for repeat violations within two years.

Sources: Zevero: UAE Climate Law Explained, EarthShift Global: Sustainability Reporting Regulations 2026

For companies navigating the UAE's requirements alongside Saudi operations, Spectreco's guide to UAE mandatory climate reporting obligations sets out the compliance requirements, registration steps, and MRV platform obligations in full.

Sources: Zevero: UAE Climate Law, Oren: GCC ESG Regulations Guide 2026, Anthesis Group: Middle East Mandatory Reporting

Based on the UAE's trajectory from voluntary guidelines to green finance mandates to full legal compulsion, Saudi Arabia is estimated 18 to 24 months behind a full mandatory framework. The window for structured preparation is open now. It will not remain open when the regulation lands.

Four Preparation Priorities for Tadawul-Listed Companies in 2026

Companies that absorb mandatory ISSB reporting without disruption are the ones that built the infrastructure in advance. These are the four non-negotiable priorities.

1. Run a Materiality Assessment Against IFRS S1

IFRS S1 requires identification of every sustainability risk and opportunity that could affect enterprise value. This is not a compliance checkbox. It is a strategic analysis requiring structured stakeholder input, sector-specific risk mapping, and integration with your financial planning cycle. Allow three to four months. Start in Q3 2026 at the latest.

2. Build a Scope 1 and Scope 2 Emissions Inventory

Every ISSB-aligned framework starts with an accurate GHG inventory. For most Tadawul-listed companies, that means creating one for the first time: mapping every energy source, fuel type, and operational asset, and calculating emissions using the GHG Protocol methodology. Scope 3 can follow. Scope 1 and 2 cannot wait.

3. Assign Formal Board-Level Climate Governance

IFRS S2 requires demonstrable board oversight of climate risks. That means documented governance: a dedicated sustainability committee, or formal climate responsibilities integrated into the board risk committee's mandate. Many Tadawul companies currently have ESG sitting in a sustainability department with no board line of sight. That structure does not satisfy ISSB disclosure requirements.

4. Align with TCFD as the Interim Framework

IFRS S2 is structurally identical to TCFD, the Task Force on Climate-related Financial Disclosures. Companies that build TCFD-aligned reporting now will find IFRS S2 compliance largely solved when the CMA mandates it. TCFD is the fastest credible path to ISSB-readiness in a market with no confirmed adoption date.

Spectreco's GCC Climate and Green Finance Advisory team supports Tadawul-listed companies across all four phases: materiality assessment, emissions inventory design, board governance structuring, and TCFD-aligned disclosure documents. Companies that start now avoid the compliance sprint that will follow the CMA's announcement.

Frequently Asked Questions

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Start Now: Before the Mandate Forces Your Timeline

A CMA announcement will not come with a six-month runway. When mandatory ISSB-aligned reporting arrives in Saudi Arabia, companies without a GHG inventory, board governance structure, and TCFD-aligned disclosure will be in immediate non-compliance, in front of investors who have already seen the UAE standard.

The companies that navigate mandatory reporting without disruption are the ones that treated the voluntary period as preparation time, not a pass.

Contact Spectreco's GCC Climate and Green Finance Advisory team to assess your current IFRS S1 and S2 readiness and design a structured preparation programme for your company.

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